1
Using Trade Agreements to ObtainMarket Access
for Legal and Other Services

• World Services Group Annual Meeting
• September 17, 2004
• By Robert Vastine
• President, U.S. Coalition of Services Industries
• www.uscsi.org

2
Coalition of Service Industries

• Association of US private companies
• Advocates services trade expansion
• By removing market barriers
• complex and diverse
• substantially regulatory
• Works mainly with governments to achieve goals
• Leverages relationships with business in other
  countries
• Financial Leaders Group
• Global Services Network
• Friends of Services

3
ABCs of Services Trade

• Four elements
• Cross-border trade
• trade conducted electronically
• Consumption abroad
• Tourism, health care, education
• Trade through US foreign affiliates
• Commercial presence
• Movement of natural persons
• Temporary entry is not immigration
• These are the four Modes of Supply of the GATS

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US is Highly Competitive in Services Trade

• Cross-border services trade was almost 50
  billion in surplus in 2003
• Services exports were 307 billion in 2003
• Affiliates sales of services were 432 billion
  (in 2001)
• affiliate sales have special significance for
  services
• Global services trade totals 1.8 trillion
• Only 20 of overall trade of 9 trillion
• Because the effort to remove barriers began in
  1994
• Barriers are substantially regulatory
• As in legal and financial services

5
Removing Barriers to US Services Trade

• US brought services into global trade system
• GATS 1994
• Framework of rules for liberal trade in services
• Major element of the WTO
• Few commitments
• Much work to liberalize services trade remains
• This work is now focused on the Doha Round of
  negotiations under WTO
• and in FTAs
• based on same principles

6
Using Trade Negotiations toBreak Down Barriers

• Multilaterally the Doha Round Negotiations
• Bilateral Free Trade Agreements
• Singapore, Chile, and Morocco have been
  implemented
• Australia, Bahrain, CAFTA, and Dominican Republic
  have been completed, but not implemented
• Andean countries, Panama, Southern African
  Customs Union (SACU) and Thailand are being
  negotiated
• Regional efforts like Asia-Pacific Economic
  Cooperation (APEC) and Free Trade Area of the
  Americas (FTAA)

7
Legal Services Trade

• Trade in legal services occurs in all the four
  modes mentioned above
• Trade occurs when a foreign client consults a
  San Francisco law firm
• or when a US lawyer provides advice to clients in
  Bangkok from his branch office or his hotel room
• US cross-border exports of legal services were
  3.3 billion in 2002
• Imports were 768 million, surplus 2.5 billion
• Trade through affiliates was 918 million in 2001
• Removing restrictions will permit more growth

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What CSI Wants for Legal Services

• Foreign lawyers and law firms should be able to
  establish and practice in any business form
  available to host country firms
• Foreign firms should be able to use the name used
  in their home country
• Foreign lawyers and law firms should be able to
  perform services in a host country that they are
  allowed to perform in their home country
• Except litigation in local courts and other
  services unique to home country law (e.g.,
  probate)

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What US Wants for Legal Services (continued)

• Foreign firms should be able to supply legal
  services relating to the host country law IF
  those services are provided by a qualified local
  lawyer affiliated with, or retained by a foreign
  firm
• Foreign lawyers who want to qualify as a host
  country legal professional should have a
  reasonable opportunity to do so
• Foreign firms should be able to choose forms of
  association with local lawyers
• Foreign lawyers should be able to use their home
  country professional titles
• Or any title authorized for use by a host country
  lawyer, if qualified (e.g., Queens Counsellor)
• Foreign lawyers should be able to participate in
  arbitration
• CSI has submitted a negotiating proposal to USTR
• USTR has provided all WTO members
• available at www.uscsi.org

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Transparency Is a Top Priority for All Sectors

• Regulatory and licensing transparency
• An overriding US objective in the WTO and FTAs
• Authorities should make administrative
  regulations publicly available
• Prior comment is essential
• Transparent, impartial registration procedures
• Regulators should process applications within a
  reasonable period
• Written statement of reasons if registration is
  denied
• Reasonable opportunity to appeal and re-apply

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Liberalization in Other Sectors

• Doha Round covers all services except air
  transportation
• And maritime
• Financial services are an important focus
• Also telecommunications, express delivery, energy
  services
• US has ambitious agenda
• To secure meaningful liberalization across all
  sectors

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Financial Services Liberalization

• CSI has led the private sector effort to secure
  liberalization
• Supported Treasury and USTR in 1997 negotiations,
  and in current Doha Round
• Developed the Financial Leaders Group
• Lobby foreign governments to liberalize
• Develop detailed lists of barriers in important
  developing countries India, Brazil, Korea,
  Egypt, ASEAN
• Ask US, EU, Japanese and Canadian government
  negotiators to secure removal of these barriers

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Examples of Financial Services Barriers We Seek
to Remove

• Example Brazil
• 170 million people, biggest Latin American market
• Tradition of state ownership and heavy regulation
• Substantial protectionism
• Banking commercial presence
• Case-by-case authorization (with conditions) by
  Presidential decree
• Restricted to acquisition of domestic bank, or
  establishment of a subsidiary branch or rep
  office
• Foreign subs cant provide universal banking
  service
• Discretionary limits on number of branches
  (including ATMs)
• No accounts in foreign currencies
• Restrictions on foreign bank rep office personnel

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Need YOUR help to Motivate Trade Liberalization
Efforts

• Support the US government effort in WTO
• And FTAs
• Lobby other governments
• Services trade liberalization will massively
  benefit the US
• University of Michigan computational analysis
  shows elimination of barriers would have 466
  billion welfare effect on US alone
• 1662 billion effect on global welfare